The use of the Herfindahl-Hirschman Index (HHI) to measure bank concentration has been criticized because
A)ascertaining whether the relevant geographic scope of the market should be regional, national, or city is becoming increasingly difficult to determine.
B)the index was originally designed for nonfinancial competition.
C)separating financial markets into banks, thrifts, and insurance companies is becoming increasingly difficult to justify.
D)All of the above.
E)Answers A and C only.

Question

Quizplus · Accepted Answer

The criticisms of the Herfindahl-Hirschman Index (HHI) include difficulties in defining the geographic scope of the market (A), its original design for nonfinancial competition (B), and the challenge of separating financial markets into distinct categories like banks, thrifts, and insurance companies (C).

The Use of the Herfindahl-Hirschman Index (HHI) to Measure Bank